Concord Enviro Systems Ltd IPO

Expertise in ZLD technology in India and well placed to harness global industry opportunities.

Integrated solutions provider supported by backward integrated manufacturing facilities.

Established presence in large international markets.

Diversified customer base across multiple industries and geographies.

Focus on innovation supported by R&D and design capabilities.

Promoters and management team delivering financial performance.

The companys business is dependent and will continue to depends on its manufacturing facilities. For Fiscal 2024 and the five-months ended August 31, 2024, for its manufacturing facilities at Vasai and Sharjah, the company total operating costs were Rs. 1,312.26 million and Rs. 861.68 million, respectively. The company is subject to certain risks in its manufacturing process which are outside the company control. Any such risks if materialised, could have an adverse effect on its business, results of operations, financial condition and cash flows.

Its capacity utilization has been low in the five months ended August 31, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, which exposes it to higher production costs and lower profitability. Low capacity utilisation in the future may adversely affect its business, results of operations and financial condition. Information relating to the installed manufacturing capacity of its two manufacturing facilities included in this Red Herring Prospectus are based on various assumptions and estimates and future production and capacity may vary.

The company is dependent on and derives a substantial portion of its revenue (more than 50%) from its top 10 customers. During August 31, 2024 and Fiscal 2024, our revenue from the company top 10 customers was Rs. 1,127.41 and Rs. 2,779.95 million, which is 54.69% and 55.95% of its revenue from operations respectively. Cancellation by customers or delay or reduction in their orders could have a material adverse effect on its business, results of operations and financial condition. The company is also have a number of Government customers which exposes it to various risks inherent in doing business with them, which may adversely affect its business, results of operations and financial condition.

The contracts in its Order Book may be adjusted, cancelled or suspended by the company customers and, therefore its Order Book is not necessarily indicative of the company future revenue or profit. Its total Order Book for August 31, 2024 was 5,017.46 and Fiscal 2024, was Rs. 4,631.92 million. Its actual income may be significantly less than the estimates reflected in its Order Book, which could adversely affect the company results of operations.

The company does not own certain of the premises of its manufacturing facilities and the company Registered and Corporate Office, including its proposed Assembly Unit.

In August 31, 2024 and Fiscal 2024, its cost of raw materials and components consumed consolidated with purchases of stock-in trade amounted to 1,046.95 and Rs. 2,615.60 million and 50.68% and 55.94% of its total expenses, respectively. Any shortfall in the supply of its components and raw materials or an increase in the company component or raw material costs, or other input costs, may adversely affect the pricing and supply of its products and have an adverse effect on the company business, results of operations and financial condition.

The cmompany has subsidiaries that have incurred losses in Fiscals 2024 and 2022.

The company is dependent on its research and development activities for the company future success. In August 31, 2024 and Fiscal 2024, its total R&D expenses amounted to Rs. 6.42 million and Rs. 13.48 million, which is 0.31% and 0.29% of its total expenses, respectively. If the company does not successfully develop new wastewater treatment membranes, systems and plants in a timely and cost-effective manner, its business, results of operations and financial condition may be adversely affected.

The present Offer comprises an Offer for Sale by the Selling Shareholders and a Fresh Issue of Equity Shares. The Company will only receive funds from the Fresh Issue portion and the funds from Offer for Sale portion will be received by the Selling Shareholders.

The company has in the past entered into related party transactions and may continue to do so in the future, which may potentially involve conflicts of interest with the equity shareholders.